U.S. President Donald Trump, right, and Vice President Mike Pence, left, during a bipartisan meeting with members of Congress on tax reform Oct. 18 in the Cabinet Room at the White House in Washington, D.C. (D. Myles Cullen/Planet Pix / Zuma Press)

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WASHINGTON — The House GOP tax plan would dramatically lower the cap on widely used mortgage interest deductions to newly issued loans totaling no more than $500,000, down from the current $1 million, according to an outline of the much-anticipated measure released Thursday.

It also would immediately slash the corporate tax rate to 20 percent from 35 percent, eliminate deductions for state and local income taxes, cap property tax deductions at $10,000 and leave unchanged the popular 401(k) retirement savings plans used by many Americans.

House Speaker Paul D. Ryan said the plan — the most ambitious attempt to overhaul the U.S. tax code in generations — would save the average American family $1,182 a year. But critics say it's still skewed heavily toward businesses and the wealthy.

The plan is expected to add up to $1.5 trillion to the deficit over 10 years, though Republicans insist the economic growth it stimulates will offset the costs.

The change in mortgage interest deductions, which would only apply to home purchases and mortgages going forward, is likely to deliver a significant blow to homeowners.

The housing industry strongly opposes efforts to place new restrictions on the deduction, arguing that it would lead to lower housing prices because there would be less of a financial incentive to buy instead of rent.

"Eliminating or nullifying the tax incentives for homeownership puts home values and middle-class homeowners at risk, and from a cursory examination, this legislation appears to do just that," said William E. Brown, president of the National Association of Realtors.

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Some liberals have long complained the mortgage interest deduction largely benefits wealthier homeowners and wanted to see it limited. But they had hoped to use the savings to pay for more affordable housing, not tax cuts for businesses and the wealthy.

Democrats immediately panned the GOP plan.

"What we are seeing today is a plan that exacerbates the unfairness and inequality in our tax code," said Senate Minority Leader Charles E. Schumer, D-N.Y. "The Republican tax plan would put two thumbs down on a scale already tipped towards the wealthy and powerful. ... Surely we can do better."

"All mortgages today remain as they are going forward," he said. "In the future, you can deduct interest on newly purchased homes up to $500,000."

Brady said Republican bill drafters were sensitive to the concerns of lawmakers from California and high-tax states on the East Coast, but he insisted that the effect of other parts of the bill, including the doubling of the standard deduction for couples to $24,000 and the revised individual income brackets, means "there is tax relief for Americans regardless of where they live."

The GOP plan also dramatically scales back the deduction for state and local taxes, limiting it in the future only to property taxes and capping the deduction at $10,000. Americans no longer would be able to deduct state and local income or sales taxes, which currently make up about two-thirds of the deduction.

The plan also would repeal the estate tax, which affects only the richest Americans, in six years. The estate tax has long been a target of conservatives.

The bill would create a new child care tax credit, backed by Ivanka Trump, the president's daughter and adviser, starting at $1,000 per child and growing over time to $1,600.

The plan reduces the current seven personal tax brackets to four. Households with up to $24,000 in annual income will not be taxed because of a new expanded standard deduction. Income from $24,000 to $90,000 will be taxed at 12 percent, income from $90,000 to $260,000 will be taxed at 25 percent, income from $260,000 to $1 million will be taxed at 35 percent, and income above that is taxed at the current top rate of 39.6 percent.

Republicans on Thursday praised the plan.

"We just finished the World Series of tax reform, and the American people won," Brady told lawmakers Thursday during a private meeting, according to a person at the meeting.

Rep. Andy Biggs, R-Ariz., said he was heartened that the 20 percent corporate rate cut would be immediate and permanent. There had been talk of phasing in the reduction, or having it expire after 10 years.

"I'm much more optimistic than I was going in," he said.

Business groups welcomed the plan, but suggested tweaks were needed.

"This bold tax reform bill is exactly what our nation needs to get our economy growing faster," said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce. But he added, "A lot of work remains to be done to get the exact policy mix right and move from a legislative draft to an enacted law."

House Republicans plan to begin debating the bill in the Ways and Means Committee next week, with more amendments and changes expected before it is sent to the House floor.

Trump wants House passage by Thanksgiving, with Senate passage by the end of the year. Republicans are struggling to achieve a major legislative accomplishment before campaigns gear up ahead of next year's midterm election.

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